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Fighting Fraud With Texts

By using SMS to alert customers to possible breaches, banks could enlist consumers in the fight against fraud -- but the industry is far from achieving dynamic information sharing.

The shock felt by consumers who finally learn that their credit card issuers have flagged their accounts for fraud (see my personal breach story, "Fraud Hits Too Close to Home for One BS&T Staffer") could largely be avoided if they were to receive text alerts immediately once the suspicious activity occurred. As Steven Kietz, an EVP with Citi and head of its new unit, Mobile Money Ventures, recently told BS&T, "We'll get the customer to be the fraud department, and they'll be happy about it because they're worried about identity theft."

Rachael Kim, an analyst with Javelin Strategy & Research (Pleasanton, Calif.) and author of a new report on data breach best practices, says, "Text alerts are something consumers have expressed a desire for -- typically to notify them of unusual activity that they specify." For example, a customer might want transactions overseas flagged; if he or she happens to be traveling and charges something, says Kim, "The customer can respond and say, 'Yes, that is me.' "

One can see the limits, as a consumer, of having to proscribe what one might not do. (For starters, a customer who travels abroad frequently can't simply brand overseas transactions as circumspect.)

Still, Kim sees the banking industry as far from dynamically sharing with consumers activities that its internal monitoring systems flag as suspicious. "The capability is not there yet, although it's definitely possible to extend fraud-detecting algorithms, eventually," she says.

Read more from BS&T's
Special Report: Data Security

Protecting Customer Data Is Small Banks' Top Tech Concern

Best Practices on Data Breaches

Fraud Hits Too Close to Home

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